Why Did (Almost) No One See the Inflation Coming?

Furman, Jason

doi:10.1007/s10272-022-1034-9

Cited by 10 publications

(15 citation statements)

References 9 publications

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“…Inflation outcomes consistently exceeded the predictions of central banks, international institutions and professional forecasters starting the first half of 2021, and their magnitude increased markedly by the second half of the year; see, for example, Furman (2022) for the US economy and Chahad et al (2022) for the euro area. The surprises were large and persistent, affecting both headline and core inflation.…”

Section: Recent Inflation Misses and Attempts To Rationalize Themmentioning

confidence: 98%

“…5 Furman (2022) argues that even allowing for non-linearities in the Phillips curve (e.g., Forbes et al, 2021) could not fully explain the surge in core inflation in the United States. 6 We thank Chris Jackson at the IMF Research Department for supplying the demand-supply shock decomposition results.…”

Section: Orcidmentioning

confidence: 99%

“…The New Keynesian Phillips curve is a useful framework to think about the potential factors underlying the recent surge in inflation:

italicInflation goodbreak= italicexpected inflation goodbreak- φ^{*} italicslack goodbreak+ italicerror term,

where

φ > 0

and the error term captures supply‐side inflationary shocks. Furman (2022) also uses the New Keynesian Phillips curve to parse through the evidence on the different contributors to the inflation surge.…”

Section: Recent Inflation Misses and Attempts To Rationalize Themmentioning

confidence: 99%

“…In relation to the Phillips curve in (1), this is equivalent to an increase in

φ

, which would have persisted for as long as labor and goods markets were disrupted. Furman (2022) discusses this possibility for the United States but rules out that it could explain all of the increase in core inflation 5…”

Section: Recent Inflation Misses and Attempts To Rationalize Themmentioning

confidence: 99%

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How we missed the inflation surge: An anatomy of post‐2020 inflation forecast errors

Koch,

Noureldin

2024

Journal of Forecasting

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This paper analyzes the inflation forecast errors over the period 2021Q1–2022Q3 using forecasts of core and headline inflation from the International Monetary Fund World Economic Outlook for a large group of advanced and emerging market economies. The findings reveal evidence of forecast bias that worsened initially and then subsided towards the end of the sample. There is also evidence of forecast oversmoothing, indicating rigidity in forecast revision in the face of incoming information. Focusing on core inflation forecast errors in 2021, four factors provide a potential ex post explanation: a stronger‐than‐anticipated demand recovery; demand‐induced pressures on supply chains; the demand shift from services to goods at the onset of the pandemic; and labor market tightness. Ex ante, we find that the size of the COVID‐19 fiscal stimulus packages announced by different governments in 2020 correlates positively with core inflation forecast errors in advanced economies. This result hints at potential forecast inefficiency, but we caution that it hinges on the outcomes of a few, albeit large, economies.

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Section: Recent Inflation Misses and Attempts To Rationalize Themmentioning

confidence: 98%

Section: Orcidmentioning

confidence: 99%

“…The New Keynesian Phillips curve is a useful framework to think about the potential factors underlying the recent surge in inflation:

italicInflation goodbreak= italicexpected inflation goodbreak- φ^{*} italicslack goodbreak+ italicerror term,

where

φ > 0

Section: Recent Inflation Misses and Attempts To Rationalize Themmentioning

confidence: 99%

“…In relation to the Phillips curve in (1), this is equivalent to an increase in

φ

Section: Recent Inflation Misses and Attempts To Rationalize Themmentioning

confidence: 99%

See 2 more Smart Citations

How we missed the inflation surge: An anatomy of post‐2020 inflation forecast errors

Koch,

Noureldin

2024

Journal of Forecasting

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“…Europa steht vor vielen Herausforderungen: Im Jahr 2022 erlebten die Vereinigten Staaten von Amerika und die Europäische Union die am schnellsten wachsende Inflation seit einer Generation (Furman, 2022). In engem Zusammenhang damit wurde eine erhebliche Steigung der Energie-und Heizkosten im Jahr 2022 beobachtet (Menyhért, 2022).…”

Section: Erwartungen An Die Europäische Zukunftunclassified

ICCS 2022. Schulische Sozialisation und politische Bildung von 14-Jährigen im internationalen Vergleich

2024

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ICCS (International Civic and Citizenship Education Study) ist die einzige international vergleichende Studie zur politischen Bildung, die neben Einstellungen und Partizipationsabsichten auch politisches Wissen erfasst und zugleich politisches Lernen und Sozialisationsprozesse an Schulen in den Blick nimmt. ICCS 2022 eröffnet einen analytischen Beitrag, der hellhörig werden lässt für die Leistungsfähigkeit des Schulsystems, Schüler*innen bei der Entwicklung ihrer Rolle als Bürger*innen zu unterstützen. 24 Bildungssysteme haben weltweit an ICCS 2022 teilgenommen, darunter 21 aus Europa. Auch zwei deutsche Bundesländer, Nordrhein-Westfalen und Schleswig-Holstein, waren mit jeweils repräsentativen Stichproben an ICCS 2022 beteiligt. Die Leitung der Studie lag in Deutschland bei der Universität Duisburg Essen (Prof. Hermann Josef Abs) und bei der Universität Leipzig (Prof. Katrin Hahn-Laudenberg).

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Re-thinking Macroeconomics After the Covid-19 Pandemic

Kitromilides¹

2023

Prospects and Policies for Global Sustainable Recovery

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Why Did (Almost) No One See the Inflation Coming?

Abstract: To understand the possible trajectory of inflation in 2022 and beyond, it is helpful to understand why the United States and Europe had so much inflation in 2021.

Cited by 10 publications

References 9 publications

How we missed the inflation surge: An anatomy of post‐2020 inflation forecast errors

How we missed the inflation surge: An anatomy of post‐2020 inflation forecast errors

ICCS 2022. Schulische Sozialisation und politische Bildung von 14-Jährigen im internationalen Vergleich

Re-thinking Macroeconomics After the Covid-19 Pandemic

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